Lightspeed posts larger loss of $100.8 million in Q1

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Montreal-based Lightspeed Commerce Inc. reported a larger net operating loss of $100.8 million for its first quarter of fiscal 2023, despite rising revenue as the economy continued to recover from the pandemic.

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“Consumers are shopping in-store and at restaurants again,” Lightspeed Chief Executive Jean-Paul Chauvet said in a press release announcing the results. The point-of-sale services company attributed the rise in revenue to “organic growth” and acquisitions of NuORDER, a B2B e-commerce company, and Ecwid, which enables small business owners to create online stores. line.

But those gains weren’t evenly distributed, as improvements in the hospitality sector weren’t enough to offset headwinds on the retail side.

Here’s what you need to know about their earnings for the three-month period ending June 30:

Past

The e-commerce industry is experiencing upheaval as pandemic-era growth wanes. Ottawa-based Shopify Inc. laid off 10% of its staff at the end of July, and it’s not the only struggling company. Shares of a number of e-commerce companies have fallen in recent months. This is partly due to consumers returning to physical retail stores, attracting business from online merchants.

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“What’s happened during COVID is that a lot of pure digital players have had a lot of tailwinds,” Chauvet said, “and now they’re struggling.”

Lightpseed, Chauvet said, is not in that situation. On a conference call with shareholders, he clarified when an analyst alluded to the tech layoffs and the stock price drop.

“For me, it’s very simple,” Chauvet said. “We are not a purely e-commerce or purely digital company. The strength of Lightspeed (is that) 90% of our gross merchandise volume (GMV) is physical retailers and restaurants. And so, this return to the physical world creates a lot of demand for us. Lightspeed’s focus on retail and hospitality makes the company “well balanced”, he added.

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Asha Bakshani, chief financial officer of Lightspeed, said interest rates and inflation did have an impact, but affected the retail side of the business more than the hospitality side. Consumers prioritize spending on “areas like travel and entertainment,” she said, over goods. Hospitality, on the other hand, is doing well. “Gross transaction value (GTV) for the hotel business grew 40% organically in the quarter,” she said. “And while we saw a particularly strong uptick in Europe, Hospitality GTV remained at healthy levels across all regions.”

Lightspeed remains focused on growing its business, even though its share price has fallen 73% this year. The company has just completed the renovation of its Montreal headquarters to make it more “warm” in order to encourage employees to return to the office of their own free will. “If you want people to want to come back — and we don’t want to force anyone to come back — you have to make it exceptional,” Chauvet said.

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The company also strives to attract top talent by implementing a People Experience (PX) policy, which provides workers with unlimited paid time off.

finance

Revenue reached $173.9 million in the quarter, up 50% from $115.9 million a year earlier.

The company recorded a net loss of $100.8 million, or $0.68 per share, compared to a loss of $49.3 million or $0.38 per share in the same quarter last year.

The company posted an EBITDA loss of $15.6 million in the first quarter, worse than the $6 million EBITDA loss in the same quarter last year. According to a fact sheet, Lightspeed believes EBITDA more accurately measures its performance than operating loss/gain, “by excluding certain items such as costs related to completing an acquisition or items that are not monetary in nature”. Chauvet said the move puts the company on track to break even by the coming fiscal year.

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The shares were trading down more than 12% at $27.47 in afternoon trading in Toronto.

Outlook

Lightspeed executives aren’t worried. “There is no doubt that the economic outlook has become more pessimistic in recent months,” Chauvet said. “I don’t want to downplay the situation, but we believe Lightspeed will continue to operate despite these challenges.”

He pointed out that “the return to in-person shopping and dining is by far the biggest macro influence on business success. And here, I’m very encouraged by what we’re seeing.

Despite economic pressures stemming from the pandemic, the company has been busy over the past two years, completing five acquisitions and introducing two new flagships. “We are very strict and disciplined in our spending, but at the same time we have so many opportunities that we are integrating all the different companies that we have purchased over the past two years,” Bakshani said.